Florida Interest Only Mortgages |
By Ken Marlborough |
|
An interest-only mortgage is one in which you only pay back
interest with no principal for a certain period of time. After
this time period, which is usually five to ten years, the
payment increases to include repayment of both interest and
principal. Most lenders in Florida offer interest-only
mortgages. As with any other mortgage, this option works best if
you understand its advantages and disadvantages.
If you
need a lower payment initially and anticipate you will be able
to make larger payments later, an interest-only mortgage may be
the right choice for you. Alternatively, if you want a larger
mortgage to buy a more expensive house, an interest only
mortgage may help because the initial payment you are required
to make is smaller so you can borrow more. Interest-only
mortgages may also be convenient for people who have an
irregular income. If your cash flow is irregular and you still
want to buy a house, an interest only mortgage may work. When
you have more cash available, you can pay off part of the
principal and the interest even before you need to.
The
majority of interest-only mortgages offer adjustable rates, so
if interest rates rise in the future, you may end up paying
more. For as long as you pay interest only, you do not pay off
any portion of the mortgage, and therefore, do not create
wealth. A good strategy to avoid this is to pay off a certain
part of the principal as often as possible in the interest only
years of your mortgage.
Some lenders may mislead
consumers by making them think interest-only mortgages save
money. If none of the advantages of an interest only mortgage
apply to you, consider examining other mortgage options instead. |
|
|
|
|
|
